333 Brannan Road's Roofdeck - Courtesy Kilroy Realty

The West Coast’s Premier Green Landlord

By Roy L Hales

Screen-shot-2014-03-18-at-3.43.47-PM1Kilroy Realty Corporation’s (KRC) new Green Lease standard was designed to ensure that tenant and landlord interests are aligned. Sustainability is an important value for the West Coast real estate giant. They want their tenants to participate in green practices like recycling and composting. Now tenants are asked to disclose their energy and water consumption and recycling performance. This has not been a deterrent to KRC finding tenants because the company attracts people who care about sustainability and want buildings they know are environmentally friendly. In the past five years Kilroy Realty has spread out from Southern California to the point that they may be the West Coast’s Premier Green Landlord.

Screen shot 2014-05-26 at 11.00.59 AMThey own 106 buildings, with more than 13 million square feet of office space, in an area stretching north from San Diego to Seattle.

When Sara Neff started working for them, KRC already had the first LEED building in San Diego and was gearing up to building one of the first LEED for Neighborhood Development projects in the world, One Paseo.

Now, 41% of the KRC’s properties are LEED certified and 55% are ENERGY STAR certified.

“The ENERGY STAR program is the basis of our energy efficiency programs. It provided us the initial foundation in managing our energy consumption to help reduce our impact on the environment and save money for our tenants,” said Neff, who is now Vice President of Sustainability at KRC.

When I asked about more recent goals, she replied, “Our main sustainability goal is to reduce energy use 10% from 2010 consumption levels by 2015.”

Exterior of 333 Brannan Street, San Franciso, also pictured at top of page - Courtesy Kilroy Realty
Exterior of 333 Brannan Street, San Franciso, also pictured at top of page – Courtesy Kilroy Realty

KRC was one of the first companies to put EV charging stations in its buildings.

“Every building has bike racks with a shower and change facility,” Neff said.

Some of Kilroy’s employees pedal to work.

Sara Neff used to walk before she became a mother in 2012. Now she usually drives so that she can pick up her daughter after daycare, but there are still days when she walks to work.

She mentioned some of the sustainability features of KRC’s buildings. A new San Francisco building will have a green roof and use stormwater for toilet flushing. Others will have solar. An existing Seattle building has installed an artistic sculpture that functions as bicycle racks. Other existing buildings have bicycle concierge service, and many buildings offer composting. One Paseo is a proposed mixed use project on a 23 acre parcel in the heart of the Carmel Valley created around a village square concept which encourages walking and biking. Not only will all the buildings at One Paseo be built to garner LEED Gold status or better, KRC is planning numerous community upgrades,including improvements to the bike infrastructure around the project.

Bike rack/sculpture on KIlroy's Fremont campus in Seattle - Courtesy Kilroy Realty
Bike rack/sculpture on Kilroy’s Fremont campus in Seattle – Courtesy Kilroy Realty

KRC was a Southern Californian company prior to 2010. They still own 4.3 million square feet of office space in San Diego, 3.5 million in Los Angeles and 437,000 in Orange County.

They saw a chance to move into San Francisco’s South of Market Street District during the early days of the recovery. They have become a catalyst for neighborhood revitalization. Kilroy is now building the city’s first two ground up LEED Platinum-certified office buildings. Once they are finished, they will own nearly 3 million square feet of SF office space.

Kilroy moved into the Greater Seattle area around the same time.

The company has acquired $2.5 billion in property since 2010, focusing on areas that were undervalued. Now people are paying two to three times as much to buy the assets next door.

COurtesy KIlroy Realty
Sun Terrace, 100 First Street, San Francisco – Courtesy KIlroy Realty

More than a third of their revenue comes from tenants in the tech sector. Microsoft, Intuit, and Salesforce.com are among them.

The Institute for Market Transformation recently named Kilroy Realty (NYSE: KRC ) one of America’s Green Lease Leaders. The Motley Fool profiled them in an article entitled, “These REITs Are Saving the Environment, One Lease at a Time.”

Sara Neff said, “We make fun stuff happen.”

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